(Updates prices)
By Karen Brettell
NEW YORK, June 14 (Reuters) - The dollar index climbed to
its highest in almost two weeks on Friday after encouraging
retail sales data for May released ahead of a Federal Reserve
policy meeting next week eased fears that the U.S. economy is
slowing sharply.
The Commerce Department said retail sales rose 0.5% last
month, just below economists' expectations of a 0.6% gain. Data
for April was revised up to show retail sales gaining 0.3%,
instead of dropping 0.2% as previously reported. The dollar index against a basket of currencies .DXY was
last 97.35, up 0.53% on the day and the highest since June 3.
The dollar has recovered in the last week from a weak start
to June, as investors consider whether expectations for U.S.
interest rate cuts have gotten too far-fetched relative to the
data.
With international economic growth slowing, investors are
nervous that U.S. President Donald Trump will impose tariffs on
Japan and Europe, which could result in more dovish central
banks globally and give the dollar a relative advantage.
The U.S. economy is also seen as better placed to handle
trade tensions than other countries.
The dollar “has benefited to date from negative
globalization news as the domestic side of the U.S. economy has
looked sufficiently robust to deal with trade-related
headwinds,” Morgan Stanley analysts said in a report on Friday.
“Other countries look less resilient in the face of trade
tensions due to higher exposure to global import demand,
dependence on manufacturing exports, and underdeveloped domestic
demand,” they said.
Chinese data on Friday flashed more warning signs, with
industrial output growth unexpectedly slowing in May to a more
than 17-year low and investment cooling, underlining a need for
more stimulus. The Fed is not widely expected to lower rates when it meets
on June 18-19, though investors will watch for new signals that
a cut by the U.S. central bank may come in July.
Interest rate futures traders are pricing in a 23% chance of
a cut in June, and an 87% likelihood of at least one cut in
July, according to the CME Group's FedWatch Tool.
The other major catalyst for the dollar in the near term is
whether the United States and China will renew trade
negotiations at the G20 summit on June 28-29.
Trump said on Friday it didn't matter if Chinese President
Xi Jinping attends the summit, adding that China would
eventually make a trade deal with the United States.
Currency bid prices at 1:58PM (1758 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar EUR= $1.1209 $1.1275 -0.59% -2.27% +1.1289 +1.1203
Dollar/Yen JPY= 108.5300 108.3700 +0.15% -1.57% +108.5800 +108.1700
Euro/Yen EURJPY= 121.66 122.20 -0.44% -3.61% +122.2700 +121.5900
Dollar/Swiss CHF= 0.9986 0.9936 +0.50% +1.75% +0.9995 +0.9926
Sterling/Dollar GBP= 1.2591 1.2672 -0.64% -1.30% +1.2682 +1.2589
Dollar/Canadian CAD= 1.3403 1.3324 +0.59% -1.72% +1.3407 +1.3323
Australian/Dollar AUD= 0.6863 0.6913 -0.72% -2.64% +0.6918 +0.6862
Euro/Swiss EURCHF= 1.1196 1.1205 -0.08% -0.51% +1.1227 +1.1196
Euro/Sterling EURGBP= 0.8901 0.8896 +0.06% -0.92% +0.8917 +0.8891
NZ Dollar/Dollar NZD= 0.6488 0.6567 -1.20% -3.41% +0.6573 +0.6489
Dollar/Norway NOK= 8.7145 8.6777 +0.42% +0.88% +8.7210 +8.6631
Euro/Norway EURNOK= 9.7683 9.7899 -0.22% -1.39% +9.7968 +9.7696
Dollar/Sweden SEK= 9.4864 9.4814 -0.55% +5.83% +9.4992 +9.4240
Euro/Sweden EURSEK= 10.6363 10.6950 -0.55% +3.63% +10.7123 +10.6260
(Editing by Bernadette Baum and James Dalgleish)